congressional committee chairman congressman greg waldin will join us. and four-star general jackson jakks king, we'll see what he thinks, see you tomorrow night, good night from new york. >> let the earnings parade begin, do not expect much of one, welcome i am neil cavuto, and as is tradition, alcoa kicking things off in this every three month ritual we call earnings season, alcoa first of hundreds of companies reporting, how they fair, and not bad over last 3 months, beating on profit but mising on revenue, go deeper looking longer, you have to worry more. because the europe on some so much of alcoa and many other u.s.nitional depend is not looking to dependable.

taxes continue to go up in portugal, moving up just as smartly here, a problem for companies and markets here and there hard to say this, much is not, most analysts bet this will be a tough earnings respect card -- report card, most expect as a group to report first year-over-year quarterly drop in about a year, a 6% decline is likely, 10% not out of the question. let's ask katherine, and gary smith, and fill flynn, gary? >> i agree with our synopsis, that i think that earning seasoning be tough, what set the tone is jobs report that we got this past friday. it shows what people we have

working, are not going to be spending. people consumer spending has been flat, consumer spending goes so does corporate america. i think you will see a lot of companies like alcoa they manage with duct tape and wire to patch together good earnings reports but revenues will be down that will cripple them. neil: katherine, will this cripple our rally we've been seeing with record after record market. >> this is a curious dynamic, we have seen system system hit a new -- s&p hit a new record this month, this is a drop in estimates fors for quarter earnings, and s&p keeps turning higher. and equity markets they done think too much about it. this is really i think corporate

earnings have been taking a backseat to the aggressive easing fed if corporate earnings do really miss, if they miss between 6 and 10 as you mentioned, that is not my base case, but that combined with a potential deceleration in economic data that we've seen. could mean a consolidation of everybodequity market declines 2 philip,. neil: philip, you look at this and europe, let's see what happens. then, the price of energy declines, rights? then whatever is happening in gas, been a steady decline after a steady run-up, it could be a mixed blessing for corporate america? >> it could be. we know these earnings, you can tell by alcoa, key will be

revenue, all smoke and mirrors, the fed is really making the people make money, when interest rates are negative they are never going to make money, that is the bottom line, energy economy the one bright spot of the earns season. we're seeing increases in the technology and energy. a lot of the companies may perform well. but at the end of the day, if europe fall apart, china goes into a slowdown, and if we are these economic shocks, one thing that gets killed first is energy demand. when energy demand gets hit, those earnings get hit down the road as well. neil: gary, you talk about cuts, and you can only go so far, you have to grow, and sustain that growth to keep whatever really we're seeing going. the market is climbing these walls of worry. but can that still be the case? >> well, my cake is we're running -- my take is we're

running on fumes, we regarding market, almost the same time last year, market had a great run-up through april, and sold off about 10%. it just feels like that, to me, again, you know how much companies cut. phil mentioned oil prices, only price with even if energy prices go down, a lot of the companies have already adapted, they have cut where they could, more cuts in their energy cost will help. but i'm afraid that duct tape, they need the revenues and they are not getting it. neil: katherine, what about the number people participating in in market. you hear of talk of individual investors, well, more aror in taking cash off the sideline, it is nothing like it used to be, how big a factor is that? >> well, neil, i can tell you that it seems like it has been a

virtuous cycle from year-to-date, s&p rallying strongly, that increases spending pushing more money from the sideline into the equity market, sitting in cash is more expensive. when you have federal reserve buying 85 billion-dollars in assets every month, and kind of keeping bond yields low. so that is the dynamic that we've seen, it bowl be important to watch -- it would be important to watch corporate earnings and u.s. economy and see if there is a is a surprise -- a negative surprise, one thing to watch for is u.s. dollar appreciation, that is something that i could i think could be a negative impact on corporate earnings in the first quarter. we've seen the dxy, th the inde, versus a basket of commodities trending higher. neil: that would be a quick, would is not, if that provides parties punch.

and force ibly keep interest rates low if a low down ensues they go low by their own nature and account. >> it will be very difficult for the fed. look at what is happening in japan right now, they are basically doubling their money supply in next 2 years, the yen is tanking compare to dollar, how does this impact our trading relationship? it will make it more difficult for our companies to export and make money, and europe right now is embraces fact that japan is trying to jump-start its economy. but at the end of the day this is a race to the bottom, for efforterers -- exporters and companies that export that could be difference of making a profit or taking a loss. that is what we have to watch, a strong dollar could hurt u.s. companies badly. neil: well, put, thank you so much i appreciate your

perspective. >> not a republican budget. it is the president's budget. white house giving republicans what they long been asking for. so why is the speaker already saying enough already? jack lew in the e.u., but something tells me not much will be fixed after this visit, why europe could be hopeless unless someone steps up to be the next maggie thatcher. >> if the fed wants to spend more it can do so only by bottles up its savings, it is no good thinking someone else will pay, that someone else is you, there is no such thing as public money, there is only taxpayer's money.

neil: i never thought i'd see

the day, president obama putting social security on the chopping block. it is an important start. judging from outcry, he is all but kills granny, it is probably a significant start, why did john boehner call it a little more than a stunt, a stun that is dead on arrival. to hear the speaker tell it, it is because the president is still attaching more tax increases to it. it does not add up. the tax hikes were about closing loopholes, why the fuss now? did republicans do to the president on social security what they hated the president doing to paul ryan on medicare, dismissing him for even trying. time to get debating.

scotty, what do you think? >> quite be o obvious, i agree h boehner, that is rare for me. but he is right, these are very moderate cuts, all that obama is doing, trying to do a pr stunt to divide the republicans, encourage the moderate senators to come along, look at his plan. when all it does is raymore taxes after we -- raise more taxes after we just saw billions of taxes raised and not give up enough to the entitlements that are needed. neil: i look at it. he moved on something that so enraged left, that they are saying this is all but killing begany. this is a significant slap of the face. they are pissed. i'm surprised that republicans

are not you know at least saying, all right we got the start of something. >> one thing that interesting about this debate, if you look at obama's entitlement reform, obama administration obama administration pushes idea they are stepping out with a big bold new compromise, but we've seen these proposed before. a lot of what is in the budget is a good small start. but it is a really small start. neil: we have to start somewhere? peter? >> we've seen them before. if you look obama budget previously, you will like it this time, i think that is what we're seeing from boehner, they done like obam obama's budget be they still don't. neil: every time on someone on left or right dithers with trying to address, a third rail issue be it medicare for paul ryan, or social security with this president, they hear it. on the other side, and i think

it forces people who are going to risk hitting that third rail, to avoid doing it in the future. >> well, that is why i think the discount what president has done as small, and rehashed policy under sells what is going on. the the reason that left is upset you have a democratic president, putt on table. without bee being forced, cuts social security benefits, when those on the left thing that social security benefits should be enhanced for. this is a luge huge things, this is an outrage for folks who purport to be about deficit reduction. neil: scotty, i know and understand what you are saying, republicans feel they already gave at the store on the tax hikes, they are not going again. what the president is talking

about closing loopholes special breaks and allowances, something that mitt romney supports and paul ryan supported, you could correctly argue that, that is before the rates witness up. but, we have to get something done. right? isn't the president moving on an entitlement a step in the direct? is it worth more than just saying, no, no, no, no, no? >> well, norm's loo normally i e excited that liberal left and media is angry at president, but real reason they are angry he said the word cut, does matter if he said hair cut or entitlement he just said cut. neil: being a republican thinking they are pissed off and annoyed. >> they are very annoyed. neil: that should be reason enough for me to say we'll talk. >> why should we trust president obama? look at last week, blaming republicans for not treating

cancer patients. >> i know that democrats are -- well chronical hatred but we have to do something. >> you are right, neil, i wish that president would watch your show more. neil: oh, he does. >> we know he does. neil: i'm watching you, watching me, mr. president. peter, where is this going? >> i think that republicans have a problem, they don't know what they stan for except they don't like president obama, that is an issue, on other hand i don't think that president obama's proposal go far enough, for now -- -- >> you have to crawl before you can walk, and walk before you can run. >> it would be nice to see republicans layout what they would like to do with social security. >> you are right, i hope something like this emboldens is more republicans entertaining the defense cuts or pairing

growth of defense, to put their own second raid cow -- sacred cows on the table. each side, more than now that is what worries me. >> the medicare stuff, republicans have done a little bit more obut on social security they have been silence. neil: do you think that stagnates the process? >> it does, it really calls into question what is this whole process designed to do? if you are in a true negotiation, and you give something that you are not interested in giving, that does not compel the other side to at least have a conversation with you, you really got to question fundamentally what are the goals and objectives, i think that is where i'm starting to question the good faith coming from speaker boehner, really, what is it you are intending if you will not at least, have conversations based on what is a huge concession, to what many people in obama's party believe out to be -- ought to be the right policy.

>> but those are moderate concessions. neil: you are right. >> cutting social security benefits is nod modest. >> moderate, by raising taxes on people that have already raise their taxes that is the issue. >> no one is cutting anything. this new formula would repeg the growth, having said that, i think you are all right, to say, trust but verify, i don't see enough trust but let's move to the next step, we'll see, we'll see. >> if this is compromise, he would have presented to bain are saying, this isa la cart -- ala cart, take your pick. he said this is it or nothing. he said you cannot pick and choose, you get this plan or not. >> why would he do that.

>> i thought you said we were bargaining. neil: i take the salad out and add potatoes, is that the same? thank you. here is all you need to know about chinese class for chumps. gets company's ceo po apollize to them, after years of stealing thousands of jobs from california it gets state governor come hat in hand, to thank them for giving some of the jobs back in person, just who is the super power here? here is the super weany here? his single miles card blacked him out here and here. he should have used... the capital one venture card. he's comg to us from home. hey fellas... hey baby, you want mama to iron your undies?

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neil: we suck, so suck up to

china? one thing to watch when they pay patty cake with our debt to sugar daddy but when california governor goes to beg for more sugar from china, that is sad, what is chinese word for you chumps? maybe governor jerry brown figures that biggers can't be choosers. what is so bad about begging for japanese investment in his state. jerry needs them, just like apple ceo tim cook needs them. why would cook apologize to china for infractions that seem a farce considering that china rips off american technology, including apple's, with such reckless abandon. the problem is not that china gets away with spanking us, the problem california businessman says we keep giving them the

entitlement to do so. it is. the tim cook thing, just -- but the other. but your state's governor, begging for jobs that china stole just adds to the insslt. >> i'm shocked. i am alarmed. i am worried about what is about to happen, you know, we can't trust china. we can't trust them. look at what they have done with intellectual property. neil: why do so many business leaders do it why does tim cook fold like a cheap suit, and california governor go begging? i can understand why we as a country collectively are shy about calls chinese on the carpet but this getting bizarre. >> we have to call them on the carpet. in regards to intellectual property, and cyberattacks, we

have a situation brown took 75 donors and special interests and bureaucrats hopes to get billions into california. but we're not addressing, we're ignores the issues of intellectual properties and cyberattacks, the chinese is buy california property, but we can't buy chinese property, this is not an equal playing field, i'm afraid, that china has billions of dollars because of our deficit spending or over spending, $74 million in interest a day, $500 billion of cash they have. it is attractive as california fails to address the real problems, it is hoping to get the billions of dollars in for failed government programs and projects and business interests -- >> i'm sorry to jump in but notion that i'm a governor of that great state, it is a great state, i would focus on wooing

american, keeping it there. than i would trying to get chinese money in there. the problem with california, is the environment. you don't change the environment by going, to the other side of the earth, hoping that find someone who is a lunatic enough to buy your crap. >> you know, like a marriage in hell. they are going to a communist country that does not respect property rights, and try to be able to get billions of dollars in and under secret concessions and deals that will not be transparent, and here we with in california, the ability toy turn this state around, with natural gas production, with getting rid of recessionlations, lowering taxes becoming competitive, not the worst state with highest taxes and highest regulations, you know, china is the biggest customer of california's massive ports. but we're go ready to lose that business, because because of

high regulation and taxes, we can't trust china, and yet we're acting like we can. and so the focus is wrong. and focus is a shame on politicians trying to ignore reality, and living some type of fantasy economics and bridge in billion -- bring in billions. neil: china has our number, they have a twisted logic that we need them more than they need us, but we need each other, we buy's lot of their stuff if that stops china stops could but it is what it is, it is nutty, good seeing you thank you. >> thank you, neil. neil: in meantime, more proof i was right,. not the cuts that will kill you but the hikes. i got the numbers to prove. and iron lady's legacy, it does not matter if you are left or

right, you have to agree, they don't make them like her any more. >> rather the poor were poorer provided the rich were less rich. that way you will never create the wealth. once they talk about gap, they would rather the gap was that. down here. not that, but that. so long as the gap is smaller, so long as the gappa smaller, they would rather had the poor poorer.

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maybe. you know why i pulled you over today? because i'm a pig driving a convertible? tail light's out.. fix it. digital insurance id cards. just a click away with the geico mobile app. neil: halftime, now time to go full throttle, this notion that sequestration was going to drive the economy off a cliff, now just off away off, since sequestration took hold, no hold on government hiring, beef inspectors are still inspects, and homeland security folks are still frisking and annoying. the hell to pay for sequestration might happen but not now, perhaps the automatic cuts were not that big in the scheme of things are spread out over many years, unlike the

payroll tax that snapped back into place this year, and retailers bemoaning the stinging impact on sales all year. more proof it is not the cuts that count but tax hikes that will leave you down for the count, not just here ask cyprus effort ga,portugal or greece. gene econom explain. >> i run a 10-person small business outside of philadelphia, we have 600 clients, i speak with just about every one of them over a period of one or two months, you know no one is talking about the sequester, no one is saying that the sequester that is hurting the business, the topic does not come up it is more about taxes,

and possibility of increase taxes, that is what i'm hear from my clients and seeing inny business. neil: from your perspective, the taxpayer union, these taxes were immediate. they are constant, with us of day, every week, every paycheck. >> gene bridge brings up an impt point not just payroll tax increase, it is what is coming down the road it goes down hill from here with the medical device excise tax taking effect that ises s societe generaleiatd with obamacare -- that is associated with obamacare, tens of thousands of layoffs, and increase in income tax next year, and increase with surtax with obamacare, and complexity burdens, i was looking through this. in preparing a study that ntu is about to release, one portion of obamacare law in the last fiscal

year, actually, 2011, is going to add 40 million hours of paperwork burden associated with a small health insurance tax credit for small sid -- sized employers for one tiny portion of the 2020 healt 2010 health c. >> imagine being the guy like gene who has to handle the nonsense. >> that is right. and i have to tell you, what is giving my clients biggest pause for concern right now is obamacare, just now, as we getting into 2013 it is hitting everyone, there are plenty of small businesses with less than 50 people, fair enough, but i have many clients with more than 50, they are struggling to figure out what they want to do, do they pay, or do they not do that and pay a penalty.

a big concern. rather than hire people, we're trying to figure out what do first before plans for the year. neil: thank you very much. that is sad. >> thank you, neil. neil: in the meantime. >> hello, i'm mr. ed. >> you are alive. because mr. ed don't have a cow, but now something is popping up in a kid's moose lasagna, it is not moose. after this.

neil: time for biz blitz, there is moose in my lasagna. they found traces of pork, to me that sounds like an improvement

but after ikea horse beat mess up, they are en wondering why ty are selling food. derrick, what do you make of this? >> key is people want to believe in the brand they buy. this comes down to the shifting of responsibility to the big brand. if a person goes to ikea they want to know if they put down their heard earned water they will get a product or service they can believe in, the moment that trust is broken that report responsibility shifts back to the consumer, it causes them to doubt in the brand, like a contract, we put money down the brand owes it to us to have a quality brand or service.

neil: my only thought on this, is that, just stick to furniture, leave the food alone, i understand at their stores, you go through a maze of picking out what you want, you can get the swedish meat balls that are perhaps not what you think. but just focus on doing what you do. right? >> well, i agree with that part, you know, when you are a company, you should do what do you best, they do 27 billion euros in business. but the way -- >> would they get any less if they were not doing lasagna. >> i doubt it, but i must tell you, i have been to the store, people lineup for the swedish meat balls, it may be horse, i don't know. but i think once they get past it, everything will be okay. if this lingers and it happens too often then, this is bad press, not good news, but i think they will get past it people love their furniture.

neil: but derrick, you think it is a basic, of honesty with the brand. maybe through no fault of their own, but whatever is happening with the food they are getting, many furniture might not be up to snuff. >> the key is how can consumer believe in the product. consumers want to know that the big brand companies have their bases covered. when issues like this come up, this causing them to doubt, perhaps there are other issues there if the consumer is forced to make a buying decision on their own they have to rethink every part of the process that could cause them to have less of a relationship. ickiikea is a iconic brand, butf the responsibility shifts to the consumer, brand owns, that the consumer is unfairly taking that burden which may cause them to shift to there are company which

may degrade the brand loyalty. neil: as long as i don't see any horse's tails pop up on a credencrecredenca. >> and gary, you have been, for a while, get rid of the guy. >> i don't know what the board has been thinking man comes in single almost doe i hav destroyy to borrow money, the cost goes up, sales down 30%, and amazingly, as a retailer you don't listen to your clientele, and you get rid of all sales that is what dropped revenues by 30 year, it will be a tough road to comeback, because when consumer leave a retail store, they are somewhere else and treated nicely. there will be a tough road going

forward. neil: long before he came out, j.c. penney was floundering? i don't know, maybe they -- bottom line, not getting it done. >> you know neil with this is there are several lesson to learn, don't try to over think the retail buyer, just follow what they are doing. we know they like sales, we know they like good deals and quality, set up a model based on those three things, you will ash a track klein you want. two -- you will attract the clients you want. >> you have to know what they are spending money ofor the life of me, i have a hard tiie figuring out what j.c. penney is. >> that is -- >> go ahead. >> one thing they are looking at now how do they have a core brand structure, one thing we learned from consumer is, what

with a tight economy people choose price over the quality of product. and if consumers want to do that whwise retailerss will realize f we want to bring in revenue that we may not want to bridge in but buck. >> j.c. penney was not doing that great in first place, i measured itny stock price by stock price performance. it was at 40, now 15, ron johnson came and and started treated it like apple, it is not an apple, they are flocking to walmart, and targets and rest of other places, and you are in the soup. neil: well, clearly. and whether there is horse in there or not same soup, thank you. >> what happens when you give half a million dollars to a couple of college kids? maybe you discover the next mark

zuckerberg, the guy who is putting his money whethe where s hunch is. >> get out! get out! >> that is great. this is going to be a great ye year. rify and lock. command is locked. five seconds. three, two, one. standing by for capture. the most innovative software on the planet... dragon is captured. is connecting today's leading companies to places beyond it. siemens. answers.

neil: who needs a boardroom when you have a dorm room? mark zuckerberg's facebook got cooked up in his dorm room, and that 17-year-old who got millions from yahoo!, he did that in college. venture capitalist is giving a

couple college kids a half million to do what they want with it, he is going to explain that. it is not that simple. >> not quite what they want, it is designed to foster p -- entrepreneurship. we saw where access to capital has not changed in 15 years. >> do you seek out specific colleges and universities? >> we started in philadelphia at penn and drexel. because of its proximity to the office, and then to new york tomorrow we launch in california at stanford and cal. neil: who do you seek out? >> we look for builders, people who have built something, that

could be something on-line. neil: they have to have the process involving a little bit. >> this is for vet esteem -- investment team, we're doing first round capital is a venture capital fund we look to find students who want to run a start up that is a venture capital fund on campus. we fund them with half a million, then, they make the investment decisions. so the students are actually identifying the talent,. neil: it could befell low o students? >> it designed to just befell low students. >> we chose for investment team we focused on drexel and penn, then we said you could invest in any start up run by a full time student in greater philadelphia region, in new york, investment team made from students of nyu, cornell tech campus, and columbia and princeton.

neil: is tech the theme? >> it tends to be, the investment amounts are so small, it has become so cheap, like you mentioned with the app, and sold to ya he. now, it is so cheap to start a company, and get something from the dorm room into the network it's, and real feedback from consumers, we're trying to align the clap capital source with entrepreneur's we've. neil: if it takes off you have a stake in the next mark zuckerberg. >> we're advising the invest emteam. neil: would be a key investor. >> if they shoes t choose to set funding froms that you is great. our financial investment we believe we have done the mag we believe this business cases there is a sustain alone entity for us to invest in.

neil: is there a common mind set of a lot of the young bill gates and zuckerbergs and michael dells? a theme? >> i think they have a very clear vision of what the world could be like. they also have a very clear vision of what it is today and what is missing, the unique thing about entrepreneurs 92 s in these colleges and universities, they see a bridge, they understand that first step toward this vision. >> not a bad idea. thank you very much. >> thank you. neil: good seeing you. >> europe is having a tough time today, u.s. -- why we all could really use a leader like the one we lost today. >> no, no. no. perhaps there would be to

delighted to hand over the full responsibility.

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>> confirmed that socialism has failed. and rejected by the people with the fair market economy with a genuine democracy. >> that is the leader with guts and when a double advantage over opponents but lewis descendants have rendered a the place oil. maggie thatcher who refuse to go soft and whose primary goal was to mantle won negative dismantled the nanny state and ronald reagan was pursuing much the same strategy in this country the one to western

role punch that many argued say to the western world. that was then, where are the keepers and the iron lady's now? to the margaret thatcher's center for freedom and former national security adviser from president ronald reagan, ronald mcfarland. where are they? >> a good question a real shortage of leadership on the world stage double size of the land six. i do think margaret thatcher was a unique figure who led that only her own country out of decline but also inspired free-market capitalism across the world including the united states with the four runner of the revolution in the united states and face it united states badly needs the leadership that margaret thatcher exemplified with

cutting taxes, small government, getting people back to work and restoring individual liberty and freedom. neil: to think of your position as a former national security advisor that it had to be economically sound to get the act together to be a leader to protect western freedoms. we seem to have forgotten that. >> it is true. recognizing the problem is one thing but to have the courage of what margaret thatcher did to take on the trade unions, an enormous amount of self-confidence common knowledge, but here in washington and gave president reagan the confidence he needed because

unfortunately, even great leaders like thatcher and reagan when they launch something against conventional wisdom, at some level feel vulnerability andrade enormous strength from the soulmates that margaret thatcher was for president reagan to inspire their own confidence to go ahead and do it. whether star wars, nuclear strategy order to have a good sense to have a different kind of leader but we were blessed in the '80s with four of the most extraordinary leaders with prime minister thatcher, ronald reagan reagan, pope john paul and negative .

neil: but some of these year-old government leaders when it got hot they would get out of the kitchen door say those cuts? we will not do them. cypresses the latest example , portugal may be the of latest fear and i remember how she stuck to these cuts risk being the country with sanitation workers to woodpile said the garbage up in the streets for months and she did not blink. >> you are right to. she had courage and conviction. she stood by her beliefs and principles and stood up to the tyranny of the trade union that brought britain to its very knees and said the principle of individual

liberty and freedom and one over large sections through privatization to buy shares in privatized companies through increasing levels of home ownership with public house saying that those could buy their own homes and these are measures that are popular with what we called middle england. neil: but worldwide the government is getting bigger much more with entitled societies. what do you think of this? >> we are not bringing a the kind of leadership into office, public life, anywhere on the planet. with the risks posed by a competitive imedia as well as the risk of scandal but the bottom line is to understand